User Account

All Pages

prepare an income statement, Managerial Accounting

Assignment Help:

Adm2341 manufactures and sells four different products. The following data are extracted from the most recent financial statements:

 

Products

 

A

B

C

D

Sales

Cost of goods sold

   Direct materials

   Direct labour

   Manufacturing overhead

S&A expenses

Operating income

$2,500,000

 

300,000

500,000

     600,000

 300,000

800,000

$2,000,000

 

400,000

600,000

     800,000

300,000

(100,000)

$1,500,000

 

200,000

400,000

     900,000

150,000

(150,000)

$   4,000,000

 

900,000

1,600,000

  300,000

 500,000

700,000

For each product, 50% of manufacturing overhead is variable costs and variable S&A expenses are equal to 10% of sales. The remaining portion includes traceable and common fixed costs.

The company is considering disposing of the Product C since it has been consistently unprofitable for a number of years. Admw2341's Management team approached you for help and advice on this matter.
 
REQUIRED

1) Prepare an income statement showing the appropriate performance of each product.

2) Adm2341's Top management asked you to provide them with a "decision rule" they could apply regarding Product C. Identify any additional information needed to implement your "decision rule".

3) To rationalise your decision on Product C, you have collected the following data:

 a) If product C is eliminated, Product D annual sales will increase by $10%. The Variable cost structure and S&A fixed expenses will be unchanged.

 b) If Product C is eliminated, Product A annual sales will drop by 10 %. The  Variable cost structure and S&A fixed expenses will be unchanged.

 c) If Product C is dropped, the management of the company feels it can save annually a total of $200,000 of fixed manufacturing overhead and S&A expenses.

Do you recommend to Adm2341's Management to drop Product C? Why ?

Related Discussions:- prepare an income statement

Credit information, So as to makes sure that the receivables are collected ...

So as to makes sure that the receivables are collected in occupied and on due date by the customers, prior information of their credit worthiness must be obtainable. This informati

Regression analysis, REGRESSION ANALYSIS A regression equation identifi...

REGRESSION ANALYSIS A regression equation identifies an estimated relationship between a dependent variable (the cost) and one or more independent variables (the cost driver).

Control-role of management accountant , Control Control includes a ...

Control Control includes a comparison of actual performance with the plan so that deviation from the plan can be identified and corrective action taken. It can be define

Facets of cash management, Cash management is related along with the manage...

Cash management is related along with the management of: Cash outflows and inflows of the firm Cash flows inside the firm Cash balances as financing deficit and inve

Steps making decisiontree, Steps making DecisionTree A decision tree is...

Steps making DecisionTree A decision tree is a graphical representation of decision process indicating decision alternatives, states of nature, related probabilities and condit

State the price determination under the market condition, State the price d...

State the price determination under the market condition The price determination under the following market condition is as follows: 1) Pure competition: in this situation

What are the elements of cost, Elements of cost: 1. Material: the sub...

Elements of cost: 1. Material: the substance from which the product is made is known as material it may be in a raw or a manufactured state. It can be direct as well as indir

Assumptions-relevant costs , Assumptions for relevant costs The key ass...

Assumptions for relevant costs The key assumptions made in relevant costing are: The cost behavior is recognized. The amount of fixed costs, unit variable costs, selli

Factory layout-jit features, Factory Layout The first stage of implemen...

Factory Layout The first stage of implementing the JIT manufacturing techniques is to rearrange the factory floor away from the batch production functional layout towards a pro

Moral Law vs. Tax Law, 1. Do you think that the tax minimization scheme ...

1. Do you think that the tax minimization scheme described to Debbie Kishimoto is in harmony with the ethical behavior that should be displayed by top corpo- rate executives? Wh

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd